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Know how to calculate total dollar returns.
Why does a Risk Premium exist?
Arithmetic or Geometric?

 Know Cash vs. Margin accounts.
 Margin Call
 Maintenance Margin
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Hypothecation
Short Sales, Naked Short Sales

 Know securities types
 Interest Bearing, stocks, derivatives
 T-bills, notes, bonds
 Futures, options – obligations or rights?
 European or American?

 Mutual funds - Yep….

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Primary market
Secondary market
IPO process
Bid/Ask
Listed, non-listed securities
Exchanges

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Fundamental analysis
Technical Analysis
FV, PV – Dividend discount model
 Constant Growth
 Perpetual Growth
 Sustainable growth rate, retention ratio
 Two-stage growth model
Residual Income Model (RIM)
P/E, P/S

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 Efficient market hypothesis (EMH)
 Weak-form Efficient Market
 Semistrong-form Efficient Market
 Strong-form Efficient Market
Excess/ Abnormal returns
Market efficiency
 Competition/Profit motive
 Implications
Random walks & Prophecy
Whut is an event study?
Informed vs. Insider Trading
Anomalies

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Behavioral Finance
 Rational Behavior
Cognitive psychology
Three Economic Conditions that lead to Rationality
1) Investor rationality
2) Independent deviations from rationality
3) Arbitrage
Prospect theory
 Frame Dependence
 Mental Accounting
 The House Money Effect
Technical Analysis – why?
 Dow Theory, Elliot Wave, resistance levels, charts, OHLC, moving averages

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Interest Rates:
 Prime rate
 Bellwether rate
 Federal funds rate
 Discount rate
Money Market Rates
 Commercial Paper
 CD
 Eurodollar
 LIBOR
Bank Discount/BEY/EAR
Yield Curve, Term Structure – STRIPS
Nominal vs. Real Interest Rates
Term Structure Theories
 Expectations Theory
 Maturity Preference Theory
 Market Segmentation Theory

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Bonds
 Prices
 Yield to maturity
 Dirty/Clean
 Callable/convertible
 Yield to call
Malkiel’s Theorems
 Teeter-totter
Duration
 Dmac
 Dmod
 Immunization by duration matching

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Diversification/Expected Return
 Variance/Std Deviation – diversification of risk, correlation
 Portfolios – expected return
Markowitz Efficient Frontier
 Minimum variance portfolio

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Systematic Risk, Unsystematic Risk Components
Portfolio betas
Reward to risk ratio
Security Market Line
 Market Risk Premium
 Determination of Beta
CAPM
 Implication
Fama French Carhart

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Forward contracts
Futures contracts
Long, Short, Hedging
Cash Futures Arbitrage
 Basis
Spot futures parity
Cross Hedging
Hedging stock portfolios with an index
Cheapest to deliver

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Option Basics
The minimum terms stipulated by stock option contracts are:
 The underlying
 The strike or exercise
 The contract size.
 The expiration date, or option maturity.
 The exercise style (American or European).
 The delivery, or settlement
Option Moneyness
Protective put, covered call, straddle
Upper/lower bounds, intrinsic value
Put call parity
ESO’s
 Vesting

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The Black-Scholes-Merton option pricing model
S, Y, K, r, T,
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Greeks – Delta, Gamma
Calculate C, P, Delta, Eta, Vega…
Implied Volitality
VIX, VXN
Delta hedging
 Calls
 Puts

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Protective Covenants
Debentures
 subordinated
Yield spread,
T-bills, Strips (Term Structure)
Yield to call
Investment Grade Rating

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Bonne chance !
Viel Glück! Alles Gute!
Maikai Pomaika!
Buona fortuna! In bocca al lupo!
Bona fortuna!
Lykke til!
Удачи!
Zol zayn mit mazl!
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